Oil Down 48% from Highs

by: Bespoke Investment Group October 15, 2008 | about stocks: DBO / OIL / USL / USO    

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With oil trading at $75/barrel, the commodity is down 48% from its highs just a few months ago.  Remember all those people who said oil would never get back to double digits again?  That prognostication didn't last long!

The irony here is that oil is down more than the stock market, but you don't hear anyone complaining about evil oil short sellers or begging for drastic supply cuts to halt the slide in prices.  It all depends on the asset class when it comes to free market intervention.

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Oil2005

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This article has 4 comments:

  •  
    Oct 15 10:16 PM
    True, took the word out of my mouth, where is the indignation toward short sellers?
    Reply | Link to Comment
  •  
    Oct 15 10:37 PM
    I don't expect OPEC to allow the prices to remain this low for long.
    Reply | Link to Comment
  •  
    Oct 16 12:58 AM
    OPEC, as usual, will have little effect. The price of crude is being discounted for a disheveled world economy. It's still historically overpriced and well above the book numbers used by oil companies who have the expertise to estimate its real value. The bubble was obviously speculation by people who never dream of taking delivery. Oil is such an important element of the world's economy that some kind of logical controls against shorting and speculation need to be implemented. The capitalization of the entire oil industry is being jerked around by this kind of madness.These devices do absolutely nothing but generate profits for the infrastructure of commodities markets. Purported "cushioning" is just so much broker rhetoric. Oil will settle out when present production costs start to limit overall production. Supply will dwindle and cause the price to go higher. The demand side of this equation is unknowable with the economy sliding quickly downhill but I'll bet those in the know have a good idea where the absolute downside limit may be. How many bpd are needed to operate the essential elements of the oil economy?
    Reply | Link to Comment
  •  
    Oct 16 01:47 PM
    I wouldn't worry about the "book numbers" used by oil companies. A few years ago those were in the low twenties, but apparently the gentlemen in the executive suites didn't quite comprehend what was taking place in China. 'Workshop of the world* and oil at $22/b don't go together.
    Reply | Link to Comment
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